ECO202 MACROECONOMICS TERM TEST 3
WITH ACTUAL QUESTIONS AND
CORRECTLY WELL DEFINED ANSWERS
LATEST 2024 – 2025 ALREADY GRADED A+
What is the formula for real wage
W/P
What does fiscal and monetary stimulus do in the short run?
Fiscal: Increases interest rate (Y, money demand and interest all increase).
Resulting in ambiguous impact on investment (I)
Monetary: decreases interest rate (money supply increases, interest rate
decreases) and increases output, Y, both of which have a positive impact of
investment (I)
What does fiscal and monetary stimulus do in the long run?
Fiscal: increases interest rate and has no impact on output (back to Yn). The
composition of GDP changes because I goes down and G goes up because public
,spending crowds out private investment. P goes up, W goes up and real wage is
constant.
Monetary: has no impact on any real variables. Only affects the nominal variables
(P increases and W increases). Real wage is constant. Cuz both P and W go up.
and real wage is W/P innit.
Receently, for a bit, what has BoC done with interest rate
they have stopped increasing the interest rate
How many times a year does Bank of Canada set interest rate targets
8 times per year
What are policy rates
These are targets for the overnight interest rate.
this is the interest rate at which financial institutions borrow and lend overnight
funds to each other.
3. Members of Canadian Armed Forces
who are the employed?
labour force MINUS unemployed.
N (employed) = L - U
,Formula for labor force?
L=N+U
EMPLOYED + UNEMPLOYED
Formula for unemployment rate
Unemployed: (labour force - employed)/labor force
Formula for participation rate. What is this an indicator of?
labour force/Working age
Indicator of labour supply
2 things needed to be considered part of "labour force"
1. eligible for working
2. LOOKING for a job
and 15+
So when are you considered unemployed?
When you are actively looking for a job but cannot get one.
, Are students who are not working part of the labour force? What does your
answer mean for unemployment?
NO. They are not part of the labour force.
This means that they are not part of the unemployment data either.
What 3 things does working age exclude?
1. Population below 15
2. Prisoners
4 factors that affect participation rate and how they affect it
1. Women in labour force (+)
2. Education (-)
3. Demographic factors (e.g. aging) (-)
4. Labour market conditions (+/-)
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